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Floods of U.S. employees have lost full-time jobs creating a large pool of temporary or contract workers who are searching to buy life insurance on their own.

“Unfortunately, the insurance industry has neglected this market and the needs of this market because the size of the insurance policy may be smaller than what they’re looking for,” said Joan Antoniello, an advisor with Weiser Capital Management in New York. “It’s a segment of the insurance population that needs guidance.”

The good news is term-life insurance policies are cheap and it is possible to find deals for as little as $15 a month. While it is rare, there are some organizations that offer limited life insurance to temporary employees.

For instance, the federal government offers the Federal Employees Group Life Insurance Program to temporary workers. Temporary workers can purchase basic life insurance and optional life insurance. The government pays one-third of the basic cost but employees pay 100 percent of the cost of optional insurance.

Basic insurance through the government typically covers a person’s salary and includes accidental death and dismemberment coverage for employees. Temporary employees can purchase $10,000 in additional coverage or up to five times a person’s salary.

What should contract workers do?

Unfortunately, industry leaders say most temporary and contract employees do not have life insurance options like the government plan.

“Most companies who have contract workers do not provide life insurance because they’re trying to save money on personnel and don’t want to pay the benefits,” said Gregory J. Kurinec, a financial advisor from Bentron Financial Group Inc. in Naperville, Ill.

If a person has been fully employed and loses their full-time job, they should check to see if their group policy is portable. This means it is likely the individual can purchase the same policy individually without passing a physical.

Research

Shopping around for a good policy is essential, says Jonathan Pond, spokesperson for SBLI of Massachusetts.

“Rates just continue to drop,” he said. “It’s not quite free yet, but it’s getting closer to free.”

While contract workers are free to purchase more permanent life insurance such as whole insurance, Pond said many contract and temporary workers prefer term life insurance because it is cheaper and in many cases, it can be converted into a whole life policy later on.

“It’s even possible consumers may wind up paying less for life insurance then they did with their group policy when they had a full-time job,” said Gregory Blum, a General Agent for Mass Mutual at the Center for Wealth Preservation. “To keep the average cost of a group policy low, it’s customary for young and healthier employees to pay slightly higher rates in a group policy in order to subsidize the older workers who may have more health problems. These younger, healthier individuals may find better deals shopping on their own,” Blum said.

Consumers may be enticed to purchase several insurance products from one agent because of multiple-policy discounts, but Antoniello cautions that consumers should find an agent who specializes in life insurance.